Reversing the brain drain in Israel

Has the recovery from the global financial crisis given the country a chance to bring back its most talented expats?

High tech world_58 (photo credit: Marc Israel Sellem)
High tech world_58
(photo credit: Marc Israel Sellem)
The waiting room to General Motors Israel CEO Gil Golan’s office is filled with empty boxes, a sure sign that, in a couple of days, the company will be moving over to spacious, custom-designed offices on the other side of Herzliya Pituach.
Golan is a man on a mission: to lure the most talented Israeli scientists and engineers back from high-paying jobs at top institutions abroad and into GM’s new local headquarters.
“This is not such a simple task,” he admits.
“It’s akin to building a respected faculty at a leading university.”
That Israel suffers from a “brain drain” – the large scale emigration of skilled individuals – is no great secret. But with growing recognition of the problem in both the government and private sectors, companies like GM are now working actively to reverse the trend.
Gil Golan’s own story is similar to that of the people he is trying to attract. A graduate of the Technion, he began his engineering career at Universal Motors Israel, the local importer of GM vehicles, before eventually moving to company headquarters in Detroit, Michigan, in 2002, to become the director of global strategy. GM sent Golan back to his native land in 2008 to head its new R&D center in Herzliya, where he has so far been joined by around 30 employees cherrypicked from top American companies, such as NASA.
The Herzliya office conducts research & development work in the fields of electronics, controls and software. The center’s engineers specialize in sensor technology, vision technology, human machine interface, adaptive systems and automations, wireless connectivity for vehicles, and robotics. The company aims to have 55 Israeli scientists recruited from overseas working there by the end of 2013.
To entice people back to Israel, Golan says GM has identified three main incentives: ensuring an ideal work environment, providing a technical challenge, and making sure recruits are surrounded by a group of similarly talented individuals.
“It begins with giving them the most comfortable chair and the most attractive room – or one that is most appropriate for their type of work,” he says, “to give them an environment that when they need to work with their heads down, they have their closed office, and on the other hand when they need to work informally with a group there are also spaces for that.
“The types of people we are hiring need to be challenged all the time. They need to be able to work on the most challenging problems and issues and once they are done, they can continue to explore, grow, develop within that domain or the next, and continue to gain knowledge and learn,” he continued “If you don’t keep them growing in the technical domain, they won’t stay.”
The process of bringing back expatriates sometimes takes years to complete, Golan said, but he added that this does not bother him as the goal is to “hire for life.”
“We want to make sure that we are recruiting people for the long-term. If there are doubts that the person will stay only one or two years, even if he’s the most outstanding [candidate], we won’t do it; it won’t help him and it won’t help us.”
As a Sabra, Golan is well aware of the pull Israelis all over the globe feel for their homeland, but he also understands that they have personal and family needs. Of the current recruits, he said around one third to 40 percent returned because General Motors made them a job offer, sweetened by financial assistance the company provides all expats to cover relocation costs such as airline tickets and shipments. The remainder of the star recruits studied overseas but returned straight afterward to Israel, where GM was waiting to sign them up.
One of the first people to answer GM’s call to return to Israel was Omer Tsimhoni, now the lab group manager of the Human Machine Interface division. Tsimhoni’s eyes were first opened to the opportunities of living abroad when in 1982, at age 17, he toured the US with the Israeli Friendship Caravan of high school students. After serving as a helicopter pilot in the Israel Air Force, Tshimhoni came to the conclusion that “there are many pilots here, but not so many scientists,” and, in 1996, enrolled in the University of Michigan’s highly regarded engineering faculty. He remained there for more than a decade, reaching his post-doctoral studies and working as an adjunct professor, until Golan came knocking.
The pull of family and homeland “were the main things that decided it for me” – Tsimhoni said he wouldn’t have accepted the same job if it had meant relocating to Australia, for example. He also said he wasn’t actively searching for work in Israel at the time, and that he wouldn’t have known GM was head-hunting Israeli expats if they had not approached him personally.
“At that time, joining GM was not an easy decision, because it was on its way down,” he says, recalling the events of 2009, when the automobiles manufacturer filed for a Chapter 11 reorganization in the New York federal bankruptcy court.
“But despite everything that happened, GM kept hiring here [in Israel].”
In addition to seeing it as a fun and challenging place to work, Tsimhoni was attracted by the daily meetings he would be conducting with the US from his new office in Herzliya, which “makes the transition easier.”
“What I’m saying is that there’s this subculture that gives you the feeling of security that you are still at a multinational.”
However, it wasn’t all smooth sailing, Tsimhoni said, repeating complaints often heard from new immigrants about Israel’s notoriously inefficient bureaucracy. As a returning scientist, the Absorption Ministry offered Tsimhoni a small payment, but he rejected it.
“The amount of money that they’re talking about at that point is only for people who can’t support themselves.”
Convincing more people like Tsimhoni to return has become a priority for the Finance Ministry under director-general Haim Shani, who has budgeted $500 million for the establishment of four hi-tech excellence centers, which he hopes will entice the 25% of Israeli computer scientists living abroad.
Speaking at the recent Presidential Conference in Jerusalem, Shani said the centers have been “bombarded with resumés of Israelis outside the country who would like to come back home,” and noted that their conditions overseas have deteriorated in the aftermath of the 2008-09 global financial crisis.
Shani has also shown his support for a committee established by predecessor Yoram Ariav that aims to turn Israel into a global financial center rivalling Hong Kong and Singapore.
One member of that committee, Harel Locker, said the key to achieving the groups’s lofty aims is to offer skilled Israelis and diaspora Jews massive tax incentives to relocate.
The legal infrastructure is already in place for this, he said, in reference to tax breaks for new olim, adding that all that is required is for the Finance Ministry to make some minor amendments to the law.
Locker, who worked at a high-end Wall Street law firm for several years, said, “There are many people there who are Jewish, or Israelis who left, or children of Israelis. They are people with a connection to Israel who are just looking for a reason to return.”
He said Israel should learn from the example set by Switzerland, which gave tax breaks to financiers when other countries were doing the opposite and raising taxes to bring in much-needed revenues after the financial crisis.
“The window of opportunity of 2008 is drifting further and further away. Switzerland understood this and gave many tax incentives, and today, you can’t find a space there for your children in the English-language schools, because so many financiers have moved from London to Geneva,” he says.
“If Geneva is bringing Englishmen and Frenchmen, with us it’s clear that Jews and former Israelis will come [to Israel] and bring their brains with them.”
Locker envisions the greater Tel Aviv area becoming a major global player if such tax incentives are implemented – fulfilling the vision set out by Tel Aviv Global City, an initiative spearheaded by the Tel Aviv-Jaffa Municipality in partnership with the government, academic institutions, the businesses sector and community organizations.
This vision is already in progress, Locker said, pointing to the announcement earlier this year that Barclays Capital will open a technology R&D center in Israel that employs 200 people and supports the company’s international finance operations. But he said the government needs to do more to ensure the flow of more human capital to support centers such as Barclays’.
Despite all this talk about convincing expatriates to return, some people – such as Prof. Omer Moav, a Hebrew University demographics expert and former adviser to Finance Minister Yuval Steinitz – feel more priority needs to be given to retaining those still here.
“One might reasonably argue that it’s important to try and reverse the process. But reversing could have two different meanings. One is ‘Let’s keep people that are in Israel and make sure that less people are attracted to leaving the country.’ And the other is ‘Let’s bring back those who have already left,’” Moav says.
“It’s like in business. Do you want to focus on keeping your clients or on finding new clients? And my approach would be that, it seems to me a bit weird to try and bring back Israelis who left with all sorts of governmental benefits which, in a sense, might actually generate the opposite incentive. Because then I know that if I leave for enough years, I get these rewards, and I would prefer that the State of Israel take into account the impact of its policy on people that are currently in Israel and thinking of leaving the country.”
The brain drain has been a problem for quite some time. According to a 2006 paper on the subject authored by Prof. Moav and colleague Prof. Eric Gould, more than 2.6% of people defined by the 1995 national census as married, college-educated Jews in the 25-40 age group were defined by the Central Bureau of Statistics in 2002 as emigrants, in comparison with only 1.1% among those with a lower education.
A 2010 paper by the same two authors entitled “When it ‘too much’ inequality not enough?” expanded on the previous data to show that higher-skilled individuals are more likely to emigrate than lower-skilled individuals when the returns for skills are higher in a potential foreign destination.
Golan offered a slightly different approach, saying the problem begins immediately after the brightest Israelis complete their military service.
“The system here in Israel forces the top students to go outside Israel to get advanced degrees, Masters, PhDs, and post-doctorates from top and leading institutions around the world,” he said.
“If you would like an academic career or you are targeting industrial research organizations, then you have to keep one leg in academia and one leg in industry. In this case, you have to have on your resume a top and leading [American] institution, an Ivy League type of university or national lab.”
Once there, they are easy prey for multinational organizations and other schools, who “target top students,” he said.
“If you are a top student and Israeli, you could get an offer that would be hard to refuse.”